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I got a good chuckle out of an interview on BNN with the CEO of BRP, just after the interest rates started going back up. And he said, to the effect, that BRP's product mix would not be affected as th
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buying a camper makes spending $45k on a SXS seem like a sound financial decision
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Consumers aren't buying big-ticket items right now.
Polaris is feeling the heat, as in its recent earnings report, the brand stated it saw its profits drop a whopping 82% compared to last year. That's, uh...bad.
During the call, Polaris' CEO Mike Speetzen stated that one factor, high interest rates, was very much an issue causing distress within the company. Higher interest rates mean it's harder not to be underwater on a purchase, as well as making payments affordable. And that while the Federal Reserve marginally lowering interest rates helped, more would need to be done in order to get people financing these machines again.
Another big issue that Polaris is facing, though not something that was brought up during the call, was that the entire snowmobile industry felt more pain than usual as last year's snowfall on the East Coast of the United States wasn't something to write home about. Indeed, the lack of snow for the vast majority of the East Coast caused many to not only push off buying a new machine, but even registrations of old machines were down. That's just another blow to the company's profits.
Speetzen did state that one issue Polaris is looking to address is outdated inventory that's now stockpiling on dealership lots. "A healthy dealer network is one of the critical components to our long-term success, which is why we have anchored our current production and shipment plans to our goal of lowering dealer inventory by 15 to 20 percent by the end of the year, and I am encouraged by the progress being made," said Speetzen in a press release ahead of the call.
Polaris now expects to see about a 20% fall in profits compared to last year. As you'd expect, the company's stock price has tumbled slightly on that news. Likewise, Polaris stated that in order to have a better outlook going forward, the company will be doing certain restructuring plans, stating, "The Company is executing certain corporate restructuring activities across the organization to increase efficiency and focus its business, including the divestitures of the GEM, Taylor-Dunn and Transamerican Auto Parts businesses."
We'll have to wait to see where the chips fall with Polaris, as it figures out how to move forward in this new world. That said, the company does make excellent powersport equipment. But you can't bank just on good engineering.
https://www.rideapart.com/news/738495/polaris-sales-plunge-snowmobile-utv-atv-third-quarter/